Mon | Mar 27, 2023

Pulse sets stage for another equity raise, share buy-backs

Published:Wednesday | April 13, 2022 | 12:10 AM

Pulse Investments shareholders passed a resolution on Tuesday to increase the company’s authorised share capital to up to 20 billion units, paving the way for entertainment company to pursue an additional public offer, APO, or otherwise raise funds via a rights issue.

Shareholders also gave the nod to Pulse for the buy-back of its own shares, an initiative Chairman Kingsley Cooper said is not included in the company’s short-term plan. However, it puts the company to execute the purchases in the future, as the needed arises, he said.

Pulse currently has authorised capital of 7.5 billion ordinary shares, over $6.52 billion of which have been issued and are listed on the stock market.

The board is expected to meet over the next few weeks to decide on the route it will take to raise capital for the company, which will fund the completion of Pulse Homes residential real estate project at the Villa Ronai complex in St Andrew, Cooper said.

To date, the company said it has sold 15 of the 30 Pulse Homes units, at US$450,000 to US$600,000 per unit. Construction of the units is scheduled to begin later this year.

“The capital raise would really be used to do more work. The project is split between two phases and in both phases, we would construct 15 homes. We would prefer to do all 30 units in one go,” Cooper told shareholders during the company’s 2021 annual general meeting on Tuesday held at Villa Ronai.

The chairman appears to be leaning towards an APO, a plan in the works since early 2020 and previously approved by shareholders as the means by which to finance new projects and expand existing ones.

The outbreak of the coronavirus pandemic in March 2020 derailed the initial plan; instead, Pulse turned to the debt market, issuing two bonds valued at $2.3 billion.

Now that the stock market is back on the upswing, Pulse is again looking to equity investors for capital to finance its continued foray into real estate and fund its hospitality projects.

“We have always said we are going to do an APO, so that is what we are most interested in. It’s just a matter of timing with the APO, we haven’t taken a firm decision on it as yet,” Cooper said.

The company’s shareholders, however, suggested that Pulse reconsider doing an APO, arguing that a rights issue would lock in greater value for existing owners. A rights issue generally is an offer to existing shareholders to take up additional shares, and generally has no public participation in the case of what is called a ‘non-renounceable’ issue.

“We will see,” said Cooper, who controls more than 70 per cent of the company and whose vote would be sufficient to counteract minority opposition.

The Pulse stock traded up 2.5 per cent to $4.49 on Tuesday, valuing the company at $29.3 billion.

The timing of the equity raise is still being determined. The offer is not expected to surpass $2 billion, Cooper said.

Pulse has projected an increase of $1 billion in annual revenue from its diversification into the real estate market, money Cooper said the company will reinvest in the business, to include potential acquisition of the 38a Trafalgar Road property that Pulse currently leases from Cooper. The fifty-year lease will expire in 2066.

“It’s a possibility; I’m not saying its definitive, but it is a possibility,” he told the Financial Gleaner.

“Pulse is looking at the acquisition of the Pulse Centre on Trafalgar Road along with other options. However, we want to proceed step by step and not get ahead of ourselves. Our decision will be made when the time is right.”